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CDSL: Long-Term Investor Report

Lesson 81/225 | Study Time: 5 Min

Course: Top Quality Companies

1. Company Overview

Central Depository Services (India) Limited (CDSL) is one of India’s two securities depositories (the other being NSDL), playing a critical role in the financial market infrastructure by holding securities in electronic form and facilitating dematerialized (Demat) transactions.

CDSL benefits from India’s capital market deepening, rising retail participation, IPO boom, and regulatory push toward digitization.

2. Industry & Growth Drivers

India’s capital market growth directly translates into higher accounts, transactions, and custody values for CDSL.

3. Historical Performance

A 20-year CAGR of ~29% in accounts, reflecting long-term compounding from regulatory reforms and retail participation.

Margins remain structurally high (>45%), though Q1FY26 showed pressure (39%).

4. Q1FY26 Results (June 2025)

Takeaway:
While Demat account additions remain strong (1.6 Cr in Q1), profit dipped due to high costs, reduced IPO activity, and lower online data charges.

5. Historical Valuations

6. Long-Term Estimates & Valuations

At CMP ₹1,576, CDSL trades above FY26 fair value, but below FY35 long-term potential.

7. Peer Comparison

CDSL enjoys annuity-like recurring income and stronger moat compared to RTAs.

8. Technicals

9. Risks

10. Conclusion – Long Term Risk & Reward

✅ Positives

⚠️ Concerns

🎯 Long-Term View:
CDSL remains a structural compounder in Indian capital markets. While FY26 earnings may see pressure, the 10–15 year growth story remains intact, supported by deepening equity culture and regulatory digitization.

📌 Disclosure

This analysis is for educational purposes only, not investment advice.

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Product Designer

4.83

Profile

CDSL: Long-Term Investor Report

1. Company Overview

Central Depository Services (India) Limited (CDSL) is one of India’s two securities depositories (the other being NSDL), playing a critical role in the financial market infrastructure by holding securities in electronic form and facilitating dematerialized (Demat) transactions.

Business Model: Fee-based (issuer charges, transaction charges, IPO/corporate action fees, KYC services) and annuity-driven (annual issuer and maintenance income).

Subsidiaries:

CDSL Ventures Ltd (CVL): India’s first and largest KYC Registration Agency (9+ crore KYC records).

Centrico Insurance Repository Ltd: e-Insurance policies platform.

Countrywide Commodity Repository Ltd: Regulated commodity repository.

CDSL benefits from India’s capital market deepening, rising retail participation, IPO boom, and regulatory push toward digitization.

2. Industry & Growth Drivers

Structural growth: Rising financialization of savings, retail participation in equities, and mandatory dematerialization of securities.

IPO & SME market expansion: Each listing directly benefits depositories.

Digital initiatives: e-KYC, eVoting, DLT for bonds, Digilocker integration.

Government push: Demat for insurance, bonds, and other assets.

India’s capital market growth directly translates into higher accounts, transactions, and custody values for CDSL.

3. Historical Performance

2007 → 2.3 million

2020 → 21 million

2025 → 153 million

FY26 Trailing (Q1): 158.6 million

A 20-year CAGR of ~29% in accounts, reflecting long-term compounding from regulatory reforms and retail participation.

Year

Sales

Profit

Profit Margin

FY2021

344

201

58%

FY2023

556

275

49%

FY2024

812

420

52%

FY2025

1082

526

49%

Trailing FY26

1084

493

45%

5-Year CAGR (Sales): ~37%

5-Year CAGR (Profit): ~38%

Margins remain structurally high (>45%), though Q1FY26 showed pressure (39%).

4. Q1FY26 Results (June 2025)

Revenue: ₹2,588 Cr (flat YoY, +16% QoQ).

Net Profit: ₹1,024 Cr (down 24% YoY, +2% QoQ).

EPS: ₹4.9 vs ₹6.42 YoY (–24%).

Margins: 39% vs 52% YoY.

Other Income: ₹623 Cr (includes dividend from subsidiaries).

Annual Issuer Fees: ₹114 Cr (+48% YoY).

Transactions: ₹62 Cr (–17% YoY).

IPO/Corporate Action: ₹21 Cr (–19% YoY).

Online Data Charges: ₹31 Cr (–42% YoY).

Other Income: ₹67 Cr (+20% YoY).

Employee Cost: ₹39 Cr (+44%).

Technology: ₹35 Cr (+35%).

Depreciation & Amortization: ₹15 Cr (+50%).

Takeaway: While Demat account additions remain strong (1.6 Cr in Q1), profit dipped due to high costs, reduced IPO activity, and lower online data charges.

5. Historical Valuations

P/E Range: Historically between 20–80x (currently ~60x trailing).

P/B Range: 2x (FY21 lows) to 24x (FY25 peak).

Premium justified by monopoly-like position, asset-light model, and annuity income.

6. Long-Term Estimates & Valuations

Year

Sales

Profit

EPS

Book Value

Blended Fair Value

Takeaway:
While Demat account additions remain strong (1.6 Cr in Q1), profit dipped due to high costs, reduced IPO activity, and lower online data charges.